New efforts to curb the ‘debt trap’ of payday lending

(NNPA)—The small-dollar loans that generate long-lasting debt for consumers and cost them billions of dollars each year are drawing the active attention of legislators and regulators alike. On April 24, the Consumer Financial Protection Bureau released a white paper on payday loans made by storefronts and by banks. Despite years of bank efforts to portray themselves as anything but payday lenders, the CFPB strips them of that cover.According to CFPB Director Richard Cordray, “What we found is there is not much difference from the consumer’s perspective, between payday loans and deposit advance loans. They have similar purposes and, as it turns out, similar usage by consumers.”At the same time, three members of Congress—Congressional Black Caucus Members Elijah Cummings, D-Md., and John Conyers, D-Mich., were joined by Oregon’s Rep. Suzanne Bonamici in urging federal regulators to take actions on bank payday loans.“We urge you to take meaningful joint regulatory action to ensure that no bank, regardless of its prudential regulator, traps borrowers in high-cost payday loans,” the members said in a statement. “Our constituents, and consumers everywhere, deserve better from our nation’s financial institutions.”